BILL NUMBER: AB 1009	CHAPTERED  09/19/00

	CHAPTER   483
	FILED WITH SECRETARY OF STATE   SEPTEMBER 19, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 16, 2000
	PASSED THE ASSEMBLY   AUGUST 7, 2000
	PASSED THE SENATE   JULY 6, 2000
	AMENDED IN SENATE   JUNE 19, 2000
	AMENDED IN SENATE   MARCH 22, 2000
	AMENDED IN ASSEMBLY   MAY 10, 1999

INTRODUCED BY   Assembly Member Correa
   (Principal coauthor:  Senator Hughes)
   (Coauthor:  Assembly Member Honda)

                        FEBRUARY 25, 1999

   An act to amend Sections 20178 and 21337 of, and to add Section
21337.1 to, the Government Code, relating to public employees'
retirement, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1009, Correa.  Public employees' retirement: purchasing power
protection.
   Under existing law, the Board of Administration of the Public
Employees' Retirement System is required to annually transfer
specified amounts to a supplemental account to fund purchasing power
protection for monthly allowances paid to all retirees, survivors,
and beneficiaries of the system.
   This bill would instead (1) establish separate supplemental
accounts for state and school employers for those purposes, (2)
require all monthly allowances paid to retirees, survivors, and
beneficiaries of contracting agencies to be increased, annually
commencing January 1,  2001, to 80% of the purchasing power of their
initial monthly allowances, as specified, (3) provide a one-time
purchasing power protection payment for the year 2000, as specified,
and (4) require the cost of those increases to be paid from employer
assets in the system.
   The bill would declare that it is to take effect immediately as an
urgency statute and shall be operative on July 1, 2000.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 20178 of the Government Code is amended to
read:
   20178.  (a) The board shall credit all contributions of members in
the retirement fund with interest at an interest crediting rate of 6
percent compounded at each June 30.  The retired member reserves in
the retirement fund shall be credited with the lesser of the current
actuarial interest rate or the current annual interest rate
compounded at each June 30.  The interest amount that would have been
credited to the member's account on and after June 30, 1991, had the
account been credited with the lesser of the current actuarial
interest rate or the current annual interest rate, rather than at the
6-percent interest crediting rate, shall be credited to retired
member reserves.
   (b) Notwithstanding subdivision (a), the difference between the
interest amount that was credited to the account of any state or
school member of this system who was paid his or her accumulated
contributions on or after June 30, 1991, and the lesser of the
current actuarial interest rate or the current annual interest rate,
shall be transferred to the state or school account, as appropriate,
established by the board under Section 21337 to fund the purchasing
power protection allowance for retirees, survivors, or beneficiaries
of state or school employers.
   (c) Notwithstanding subdivisions (a) and (b), if the current net
earnings rate for state or school members exceeds the interest rate
used to credit the retired member accounts of state or school
employers, in addition to the amounts transferred to the separate
accounts established for state and school employers under Section
21337, the remaining amounts shall be credited to employer accounts.

   (d) The current annual interest rate may be lower than the current
actuarial interest rate.
  SEC. 2.  Section 21337 of the Government Code is amended to read:
   21337.  (a) On an annual basis, the board shall transfer funds to
separate supplemental state and school accounts, to fund the
purchasing power protection allowance of retirees, survivors, and
beneficiaries of state or school employers, respectively.  The
amounts transferred shall be the lesser of the following:
   (1) The amount necessary to increase all monthly allowances paid
by this system to retirees, survivors, and beneficiaries of state or
school employers to 75 percent of the purchasing power of the initial
monthly allowances.
   (2) 1.1 percent of the net earnings on state or school member
contributions, as determined by Section 20178.
   (b) The funds transferred to the two separate supplemental
accounts shall be utilized to increase all monthly allowances paid by
this system to retirees, survivors, and beneficiaries of state and
school employers, up to a maximum of 75 percent of the purchasing
power, as determined by the board, of the initial monthly allowances,
notwithstanding the benefit provided by Section 21328, that were
received by every retired state or school member or survivor or
beneficiary of a state or school member or retiree who was eligible
to receive any allowance at the end of each fiscal year.  Funds
remaining in the state or school account after the payment of
benefits under this section shall be transferred to the respective
state or school employer accounts.
  SEC. 3.  Section 21337.1 is added to the Government Code, to read:

   21337.1.  (a) As of January 1, 2001, and annually thereafter, all
monthly allowances paid by the system to retirees of contracting
public agencies, and to survivors and beneficiaries of members and
retirees of those agencies, shall be increased to 80 percent of the
purchasing power of the initial monthly allowance as determined by
the board.
   (b) Notwithstanding subdivision (a), retirees of contracting
public agencies, and survivors and beneficiaries of members and
retirees of those agencies, who receive a monthly allowance payable
by this system shall also receive, on or after January 1, 2001, a
one-time lump-sum payment in an amount equal to the difference, if
any, between the purchasing power protection allowance paid between
January 1, 2000, and December 31, 2000, and the purchasing power
protection allowance that would have been payable if this section had
been operative during that period.
   (c) The cost of the increase in allowances paid pursuant to
subdivisions (a) and (b) shall be paid from the same assets of the
employer used in the determination of each employer contribution rate
for each membership classification under which service was credited
that affects the allowance calculation of the retirees, survivors, or
beneficiaries.
  SEC. 4.  This act shall be operative on July 1, 2000.
  SEC. 5.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect.  The facts constituting the necessity are:
   In order to limit the erosion of the purchasing power of monthly
allowances paid to retirees, survivors, and beneficiaries of
contracting agencies, it is necessary that this act take effect
immediately.
